Heather Boushey, White House Council of Economic Advisers Member, joins Yahoo Finance Live to break down which issues the Biden administration may prioritize in early 2022, including the Omicron variant, inflation, labor market recovery, supply chain worries, the child tax credit, and the Build Back Better plan.

Video Transcript

- That economic disruption stemming from the Omicron's variant, a surge in COVID cases contributing to thousands of flight cancelations over the holiday weekend. Meanwhile, you've got grocery stores and restaurants saying they don't have enough workers to keep their doors open. Let's bring in Heather Boushey, a member of the White House Economic Council of Advisors.

Heather, it's great to have you on our first show of the new year. You know, we've certainly seen a lot of disruption stemming from this variant. A number of economists ahead of the new year are cutting their growth forecast for the quarter as a result of what we've been seeing play out. How is the White House assessing the economic disruption so far?

HEATHER BOUSHEY: Well, thank you and good morning. And happy new year, Akiko. You know, these are the issues that have been on everyone's mind over the course of the end of December into the holiday season, as you know. As you noted, flights were canceled and Omicron's just started to emerge with such force, especially in the Northeast around the country.

But here's the thing, in terms of the economy, we are in a very different place than we were when the pandemic began or even when Delta began. We have so many Americans who gotten their vaccine and their boosters and we have so many more tools at our disposal. We know what works in terms of masking and other things that we can do, particularly getting that vaccine.

And so we're in a very different situation now than we were before. So we remain optimistic that we will continue to see the economy moving forward. We have very low numbers of people now who are on unemployment benefits as the labor market is improved.

Back in November we saw that the unemployment rate fell back to 4.2%, that's the most recent data we have. And we do expect it to continue to see that recovery in the labor force, in the labor market, even as we weather through this difficult new variant.

- Yeah. Heather, it's accurate. I mean, when we talk about maybe some of the storylines that are playing out there, of course, you know, moving past this latest Omicron's wave, it's probably a good reminder that a lot of the inflationary pressures we've seen here. Of course, you don't need to delve into the numbers, everyone's already highlighted those, they're the hottest inflation print we've seen in the last almost 40 years.

But when you look at maybe the drivers, it does seem like there are two different messages right now. One on the side of prices are going up because there's too much social spending, and then the one that economists are citing, which is mostly supply chain issues that we're now seeing, as Akiko mentioned, come back to the fold. So how do you maybe right that wrong in terms of the story as you see it? And how, I guess, you're using data points to try and tell it now?

HEATHER BOUSHEY: Well, we always knew that the recovery from this historic pandemic was not going to be a straight line. We've always known it would be tricky and especially as this is a global phenomenon and our supply chains are global, that this is going to cause hiccups and kinks in the supply chain along the way. And that's, of course, what we've seen over the past few months and it is added to those inflationary pressures.

But as we get this virus under control, we expect those to continue to dissipate. Omicron is throwing a new wrench into it. But, again, we have more tools, the extent to which people are vaccinated, that certainly lowers the challenge of the new virus.

Even though people can get sick, it's not-- we think perhaps there may be different outcomes than there were pre-vaccination. So as we're moving through, we expect these supply chain issues to start to work themselves out.

- And you're certainly right that in terms of this variant itself, we haven't seen the kind of hospitalizations we saw in previous surges, largely because so many people are vaccinated. But the reality, there's still a lot of people who are calling out sick, unable to return because they've tested positive as well. And the concern here is that that's only going to exacerbate some of those disruptions in the supply chains that you just pointed to.

The president certainly getting hit in the poll numbers on that front despite what the White House has put forward in terms of measures to try and ease the backlog. What do you think the public's getting wrong in terms of how aggressive the White House is moving on these issues?

HEATHER BOUSHEY: Oh, certainly the president has been focused on supply chain issues since long before becoming president. This was something he focused on during the campaign because it was something that we saw was a challenge as the pandemic began.

What we are seeing now is that the administration has taken a series of steps, from making sure that the ports could have a free flow of goods and services out on the West Coast, to addressing issues with truckers, and, of course, addressing issues around market structure and competition.

So there's a whole of government approach right now to making sure that even as we're seeing these challenges, a piece of that is because we have a highly concentrated markets in many parts of the country, in many goods that are produced. And so we really focused on making sure that those markets are competitive and that'll help the supply chain issues as well.

But again, I mean, these are challenging times and, of course, workers who have COVID, who need to stay home that certainly does pose challenges for employers and for those goods and services across the country.

But the good news is, is that the extent to which everyone can get vaccinated, it makes those times out of work shorter and it'll help us get back on our feet much quicker. And so we're really in a very different position than we were at the beginning of the pandemic.

- You used the term getting back on your feet and that's, I guess, kind of interesting as we move into this next chapter in 2022 in battling the pandemic. Of course, right now the big battle between the White House and Democrats is getting that last chapter passed in the social spending front. And right now the child tax credit seems to be a big hang up there.

I know you bend forward in pushing for that and we talk so much about maybe some of the social nets that rolled off in the pandemic. But still, you still have the US personal saving rate holding above where it was back in 2019, though it's come down the longer this pandemic has dragged on. So, I mean, when you look into the numbers themselves when you track the health of the American consumer, how important is it to get the child tax credit included and what happens if you don't?

HEATHER BOUSHEY: Well, certainly the child tax credit and the fact that families were receiving that monthly is a very important part of the story. You have to remember what we did is a part of the American Rescue Plan is that we made the child tax credit fully refundable all the way down the income ladder, so everyone got it who has children. And that really did help families help them have that little bit of cushion, help them deal with all the things.

But at the same time, the American Rescue Plan and other steps the administration has taken have done a lot to shore up families. You know, there was additional moneys going out through nutrition programs, for example, that also help the lowest income families.

And, of course, getting the unemployment rate down to 4.2% has being incredibly beneficial to families across the country, giving folks back in those jobs, and we've seen wages rising fastest for those at the very bottom of the income distribution. So really it's making sure that those jobs are available and that people have what they need in order to get back into work.

And the child tax credit is a piece of that puzzle but it's part of the overall package that the president put in place as a part of the American Rescue Plan and the pieces that we still need is a part of Build Back Better. Those child care supports, that support for universal pre-K, for example, these are also important pieces of the puzzle.

- Heather, you know, we started the conversation by talking about where the recovery is. You know, just by concerns about inflation, the economic numbers have been relatively positive. How much of maintaining this momentum do you think hinges on passing pieces of Build Back Better?

Even if you don't get the child tax credit because Joe Manchin is not necessarily in support of it. How is the White House assessing that? How important is it to get this Bill passed, to be able to maintain the kind of momentum in the economy that you've alluded to?

HEATHER BOUSHEY: So what is so important is that families have what they need to be able to fully participate in the labor market and to have that economic security, and that is so much of what the Build Back that are package is about. So one of the challenges that we've seen across the economy has been in families being able to access care, child care and care for their aging loved ones.

Build Back Better make significant long term investments in those care structures. It also, of course, will take a variety of steps to make sure that our economy is making that transition to green energy, making sure that we are supporting those businesses as they make that transition so that we can have those good jobs here in the United States.

So this is not-- it's not a quick hit, it's not just an infusion of cash into the economy, it's really about making sure that our economy can succeed over the medium to long term. So I would argue that nothing could be more important for our economy than passing Build Back Better, and it's an important piece of this overall economic recovery.

- Well, Heather Boushey, I appreciate your time today. Member of the White House Council of Economic Advisors.